| Wrap Up |
| The Canadian dollar weakened against its U.S. counterpart , with the currency pulling back from a near two-week high earlier in the session as investors weighed the prospect of an unexpected interest rate cut next week by the Bank of Canada. Chances of an interest rate cut at the central bank’s Sept. 4 policy announcement have climbed to 25% from less than 10% at the beginning of the month. The bank highlighted last month the risks trade wars pose to the global economy as it left its benchmark interest rate on hold at 1.75%. The two-year bond rose 10.5 Canadian cents to yield 1.341% and the 10-year bond was up 87 Canadian cents to yield 1.125%. Canada’s 10-year yield fell 21.6 basis points below the 2-year yield, which was the curve’s biggest inversion since May 1999. |
| Levels and recommendations |
| The U.S. dollar was modestly higher against the yen this morning, but the move indicated little change in investor sentiment as the Japanese currency largely clung to its recent gains on growing fears of a global economic downturn. The yen stood at 105.83 per dollar weaker on the day, but nevertheless close to the 2-1/2-year high of 104.44 hit on Monday as renewed trade tension sent investors into safe-haven assets like the Japanese currency and government bonds. The British pound slumped as much as 1% against the euro and the dollar on British Prime Minister Boris Johnson’s move to limit parliament’s opportunity to derail his Brexit plans. The Canadian dollar is trading flat around 1.3290 levels despite broader strength seen in the US dollar index after US President Donald Trump softened his tone against China and predicted that the two countries will be able to reach a trade deal. Rising crude oil prices turned out to be one of the key factors that have provided some support to loonie. The USDCAD pair is expected to trade in the range of 1.3275-1.3325 levels for the day. |